In The Papers: Chinese Imports, Affirmative Action And Foreign Aid

Every Monday, the National Bureau of Economic Research, a nonprofit organization made up of some of North America’s most respected economists, releases its latest batch of working papers. The papers aren’t peer-reviewed, so their conclusions are preliminary (and occasionally flat-out wrong). But they offer an early peek into some of the research that will shape economic thinking in the years ahead. Here are a few of this week’s most interesting papers.

What they found: Increased competition from Chinese imports between 1999 and 2011 led to a loss of 2 million to 2.4 million jobs in the United States.

Why it matters: The U.S. labor market was growing slowly even before the Great Recession hit. Jobs in manufacturing, which held steady in the 1990s, fell nearly 20 percent between 2000 and 2007. Partly causing this sag in the job market was an astonishing increase in import competition from China. The share of U.S. manufacturing imports from China rose from 4.5 percent in 1991 to 23.1 percent in 2011. The direct employment losses associated with this flood of Chinese goods totaled 560,000 manufacturing jobs (about 10 percent of all manufacturing jobs lost between 1999 and 2011). But the researchers employ other statistical strategies to capture the indirect effects, such as jobs lost due to lower aggregate demand (following the loss of those manufacturing jobs), or the ripple effects on other industries not directly affected by the Chinese imports (but linked to those U.S. industries affected). In total, the direct and indirect job losses total 2 million to 2.4 million.

Key quote: “Our estimates show sizable job losses in exposed industries, and few if any offsetting job gains in non-exposed industries, a pattern that is consistent with substantial job loss due to aggregate demand spillovers.”

Data they used: U.N. Comtrade Database for international trade data; County Business Patterns for employment data

What they found: Affirmative action policies for disadvantaged fifth- to eighth-grade students significantly improves performance on a national mathematics exam and raises the amount of effort they spent preparing. Such policies, however, have no negative impact on the incentive to study among advantaged students.

Why it matters: Most affirmative action studies about education seek to measure the effect after admissions is gained, rather than study the incentives before. The study concerns an experiment on fifth- to eighth-grade students preparing to take the American Mathematics Competition 8 (AMC8) exam. The students were divided into two groups: one “colorblind” control group and one affirmative action group. Prizes were reserved for disadvantaged students (defined as an underrepresented minority) in the affirmative action group. Conversely, prizes were awarded based on scores alone in the control group. Researchers then tracked the students’ time spent on a practice website in the 10 days before the exam. The experiment’s results showed that affirmative action students saw a significant boost in pre-exam studying, and their scores were significantly improved. There was hardly any evidence that, on average, advantaged students put in less effort before the exam.

Key quote: “From a policy perspective, these finds are important, as they indicate how AA [affirmative action] not only promotes more racial diversity on college campuses, but at the same time it may also narrow achievement gaps between Whites/Asians and Blacks/Hispanics by motivating higher levels of pre-college human capital investment on the part of under-represented minority students.”

What she found: No more than 5.25 percent of $3.5 trillion in foreign aid has gone to the poorest 20 percent of countries.

Why it matters: Between 1960 and 2013, at least $3.5 trillion (in 2009 prices) was deployed as foreign aid from rich countries to poor ones. And the flow of aid was relatively steady, originating from roughly the same group of top donor countries (the U.S., Japan, France, Germany and the U.K). But aid does not flow to countries that need it most: The poorest fifth of countries only received between 1.69 and 5.25 percent of all foreign aid between 1960 and 2013. The composition of foreign aid also varies widely, from debt relief to humanitarian assistance to cash transfers to food. The author also concludes that the state of foreign aid research needs an upgrade. In reviewing the literature on the effectiveness of existing and past aid, she finds results that are sensitive to timing, measurement, sampling and statistical judgement.

Key quote: “The polarized arguments of the necessity of aid versus the detrimental effects of aid are premature, and the discussion of total foreign aid and the lack of economic improvement for the poorest countries in the world is somewhat misleading.”

Data she used: Foreign aid, termed “Official Development Assistance,” as reported via the Organization for Economic Cooperation and Development’s Development Assistance Committee

Andrew Flowers writes about economics and sports for FiveThirtyEight. @andrewflowers